Business Car Contracts Blog

Road Tax Change for Diesel Drivers

Drivers of diesel cars temporarily have an additional supplement to pay on their road tax and company car drivers also face a rise in payments from 1st April 2018.

Changes were made last year to road tax payments which came into force 1st April 2017. These changes encouraged drivers to choose vehicles with low C02 levels, rewarding these vehicles with lower rates.

In the 2017 Autumn budget Phillip Hammond announces further changes which have been called the 'diesel supplement'. There are two elements to this change. The first affects every diesel driver. All diesel cars which do not pass the second part of the new Real Driving Emissions test (RDE2) will be subjected to an additional charge in their first year road tax payment. The table below shows the rates that will be charged.

vehicle Co2 emissions (g/km)

1st year rate for petrol/electric/hybrid vehicles and for diesel vehicles until March 31st 2018 (£)

1st year rate for diesel vehicles without a RDE2 certificate from 1st April 2018 (£)

0

0

n/a

1-50

10

25

51-75

25

100

76-90

100

120

91-100

120

140

101-110

140

160

111-130

160

200

131-150

200

500

151-170

500

800

171-190

800

1200

191-225

1200

1700

226-255

1700

2000

255+

2000

2000

Diesel drivers will be encouraged to choose a vehicle which has passed the RDE2 test successfully and been issued a certificate. However, RDE2 testing does not begin until 2020. This means no diesel vehicle will be able to get a certificate for the next 2 years and therefore every diesel vehicle will need to pay the extra charge. If the vehicle then passes the RDE 2 test in 2020, the extra charge will not apply. To pass the RDE2 test a vehicle must conform to Euro 6 emissions standards, this is typically cars manufactured from 2014 onwards.

After the first year the usual standard rate of £140 will apply to all diesel vehicles and is not altered by the RDE2 test.

For company car drivers there is another part of the 'diesel supplement' that will apply. Any driver of a company car which is diesel, without an RDE2 certificate will have their diesel surcharge increased from 3% to 4% from April 1st 2018. This extra charge is also temporary as it will apply only to diesel vehicles without a RDE2 certificate, which until 2020 is all diesel cars.

The funds raised from applying the diesel surcharge will be used to create a Clean Air Fund which is expected to reach £220 million. This money will be made available to areas which suffer from high air pollution. Examples of the ways these areas could use this money include lowering the cost of public transport for those with low incomes and updating buses with energy efficient technology.